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This morning (April 19), the State Bank of Vietnam (SBV) held a press conference to announce its banking operations results for the first quarter of 2024. Speaking at the conference, the head of the Monetary Policy Department, Mr. Pham Chi Quang, said the SBV had taken stronger measures to stabilize the foreign exchange market.
“Today, the SBV website published a plan for foreign exchange intervention. Starting today, the SBV will publicly sell foreign exchange to commercial banks with negative foreign exchange positions, with the exchange rate for the intervention being 25,450 VND per dollar,” said Mr. Quang.
According to Mr. Quang, this is a very strong measure on the part of the SBV to curb market psychology and ensure that the foreign exchange market remains liquid and can meet all the legitimate foreign exchange needs of the economy.
“The market reacted positively as soon as the SBV made the announcement, and foreign exchange transactions have fallen below the SBV’s intervention rate,” said the head of the Monetary Policy Department.
Mr. Quang emphasized that moving forward, the SBV will continue to closely monitor developments in the foreign exchange market and implement measures to stabilize the market, with the aim of meeting the economy’s needs and keeping inflation under control.
Speaking about the exchange rate, the Deputy Governor said that it has risen by 4.9% since the beginning of the year. This is a level that requires attention. Regarding the management of the exchange rate in the first three months of the year, the SBV closely monitored the situation and employed a range of tools and measures, including managing the central exchange rate, to coordinate its movement up and down appropriately with the general situation.
In terms of the reasons for the increase in the exchange rate, Mr. Tu said that it was due to expectations that the FED would cut interest rates in 2024, which have not yet materialized. In fact, inflation in the US remains high, employment figures are positive, and the market is constantly adjusting. Many had predicted that the FED would ease monetary policy in the first three months of the year, but so far, this has not happened.
“Vietnam’s approach to managing the exchange rate is very flexible. We will continue to stabilize the exchange rate for the economy, but we will not fix it. Instead, we will adjust it up and down in line with the situation and to avoid major impacts from the global environment. We are also prepared to intervene if the exchange rate continues to have a negative impact, even as early as today,” said Mr. Tu.
